Following its fourth-quarter earnings, Alphabet recently reported its full-year and final quarter financial results. The report says that while disclosing the fourth quarter, Alphabet shares are off nearly 5% after-hours of trading.
Besides, CEO Sundar Pichai (Alphabet and Google) have unveiled the company’s revenue growth from $39.3 billion in 2018 to $46.1 billion in 2019. Apart from that, he also reveals the firm’s net profit is increasing from $8.9 billion to $10.7 billion over the same period.
While the company beats on the net income as estimated by the analyst, but it missed the total revenue with a slight deflection.
What were the Analyst Estimates?
According to Forbes:
Earnings Per Share: $15.35 versus estimates of $12.53 per share, as polled by Refinitiv
Revenue: $46.08 billion versus estimates of $46.94 billion
Although the profits of the company were higher than expected, it sniffed on revenue estimates. Additionally, this is the first time reports after Sundar Pichai was headed as the CEO of Alphabet when Larry Page decided to walk down back in December.
The most surprising thing that we have seen in this year’s financial reports is the new CEO also unveiling about its YouTube platform earnings for the first time. Moreover, not only YouTube but Google’s Cloud platform is also mounting up and contributing higher profits in overall firm revenue.
The report added that YouTube had generated around $15 billion in ad revenue in 2019, which scored nearly 35% growth from 2018. It means YouTube alone is contributing roughly 10% of the company’s profit.
“The video platform has over 20 million premium subscribers (ad-free) and crossing 2 million subscribers on its paid TV service. Alphabet says revenues from those products are bundled into the “other” category, which made $5.3 billion last quarter and also includes hardware like Pixel phone and Google Home speakers. That makes it hard to gauge the specific performance of any one product bundled under that category.” – The Verge added to their story.
Meanwhile, Google’s Cloud platform run rate is escalating by 53.6% from $8 billion to around $10 billion from Q2 to the final Q4, says the financial report. Google Cloud Platform, including enterprise-grade solutions like Gmail, Drive, Docs, Hangouts, and G-Suite cloud infrastructure, remarked a significant $2.6 billion round in cloud sales.
Goldman Sachs analyst Heather Bellini says – “Analysts on the company’s call were thrilled about the fact of the new disclosures: This is the best Google or Alphabet call I’ve been on since I’ve covered the company.”
This is the first time Google had revealed its YouTube platform revenue since 2006 when it acquired the video platform for $1.65 billion. However, if talking about meeting the estimates defined by Wall Street expectations, Google has beaten the calculations on profits but misses to suffice the revenue.
Hence, it can be assumed as one of the reasons why Google is revealing YouTube and Cloud platform revenues.